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Operations management refers to the administration of business practices to create the highest level of

efficiency possible within an organization. It is concerned with converting materials and labor into goods
and services as efficiently as possible to maximize the profit of an organization. Operations management
teams attempt to balance costs with revenue to achieve the highest net operating profit
possible.investopedia. com

Operations management is chiefly concerned with planning, organizing and supervising in the contexts
of production, manufacturing or the provision of services. As such, it is delivery-focused, ensuring that
an organization successfully turns inputs to outputs in an efficient manner. The inputs themselves could
represent anything from materials, equipment and technology to human resources such as staff or

Examples of the types of duties or specialist positions this encompasses are procurement (acquiring
goods or services from external sources), managing relations with those

olved in processes, and improving a company’s sustainability with regard to its use of resources.tomba.

operations management performs a transformation role in the process of converting inputs such as raw
materials into finished goods and services. These inputs include human resources, such as workers, staff,
and managers; facilities and processes, such as buildings and equipment; they also include materials,
technology, and information. In the traditional transformation model outputs are the goods and services
a company produces.

Operations management (OM) is the business function responsible for managing the process of creation
of goods and services. It involves planning, organizing, coordinating, and controlling all the resources
needed to produce a company’s goods and services. Because operations management is a management
function, it involves managing people, equipment, technology, information, and all the other resources
needed in the production of goods and services. Operations management is the central core function of
every company. This is true regardless of the size of the company, the industry it is in, whether it is
manufacturing or service, or is for-profit or not-for-profit.informit.com


Operations management involves planning, organizing, and supervising processes, and make necessary
improvements for higher profitability. The adjustments in the everyday operations have to support the
company’s strategic goals, so they are preceded by deep analysis and measurement of the current
Historical background

Operations management was previously called production management, clearly showing its origins in
manufacturing. Historically, it all began with the division of production, starting as early as the times of
ancient craftsmen, but spreading more widely only by adding the concept of interchangeability of parts
in the eighteenth century, ultimately sparking the industrial revolution.

Still, it was not until Henry Ford took a twist on manufacturing with his famous assembly line concept,
otherwise known as “bring work to men,” that the management of production for improving productivity
became a hot topic. From the 1950’s and 1960’s, it formed a separate discipline, besides bringing other
concepts, such as Taylorism, production planning, or inventory control, to life.

As the economies in the developed world were gradually shifting to be service-based, all the corporate
functions, including product management, started to integrate them. The service side also began its
approach by applying product management principles to the planning and organizing of processes, to
the point where it made more sense to call it operations management. Cleverism.com

erations management

This is the management of processes that create value for a company and its customers. These
processes transform inputs - such as materials, energy, services and people - into goods and services

Companies create value in different ways, whether it be manufacturing an aircraft or producing a

television show. Effective management of operations can represent a source of competitive advantage.
lexicon. com

Operations management is an area of management concerned with designing and controlling the
process of production and redesigning business operations in the production of goods or services.[1] It
involves the responsibility of ensuring that business operations are efficient in terms of using as few
resources as needed and effective in terms of meeting customer requirements. It is concerned with
managing an entire production system which is the process that converts inputs (in the forms of raw
materials, labor, and energy) into outputs (in the form of goods and/or services), as an asset or delivers a
product or services.[2] Operations produce products, manage quality and creates service. Operation
management covers sectors like banking systems, hospitals, companies, working with suppliers,
customers, and using technology. Operations is one of the major functions in an organization along with
supply chains, marketing, finance and human resources. The operations function requires management
of both the strategic and day-to-day production of goods and services.[3]

Ford Motor car assembly line: the classical example of a manufacturing production system.
In managing manufacturing or service operations several types of decisions are made including
operations strategy, product design, process design, quality management, capacity, facilities planning,
production planning and inventory control. Each of these requires an ability to analyze the current
situation and find better solutions to improve the effectiveness and efficiency of manufacturing or
service operations.[4]Wikipedia. Com

Operations management focuses on carefully managing the processes to produce and distribute
products and services. Major, overall activities often include product creation, development, production
and distribution. (These activities are also associated with Product and Service Management.) Related
activities include managing purchases, inventory control, quality control, storage, logistics and
evaluations of processes. A great deal of focus is on efficiency and effectiveness of processes. Therefore,
operations management often includes substantial measurement and analysis of internal processes.
Ultimately, the nature of how operations management is carried out in an organization depends very
much on the nature of the products or services in the organization, for example, on retail, manufacturing
or wholesale.

According to Collins English Dictionary (1986), an operation is defined as "a process, method or series of
acts especially of practical nature".

According to Galloway (1993) "operations management is concerned primarily with manufacturing or

the change of state of physical goods".

However, Galloway (1993) argues that "the operations management is all about effective and efficient
management of any operation irrespective of whether a physical good is involved or not".

According to Kumar & Suresh (2009) "Operation is that part of as organization, which is concerned with
the transformation of a range of inputs into the required output (services) having the requisite quality
level. Management is the process, which combines and transforms various resources used in the
operations subsystem of the organization into value added services in a controlled manner as per the
policies of the organization. The set of interrelated management activities, which are involved in
manufacturing certain products, is called as production management. If the same concept is extended to
services management, then the corresponding set of management activities is called as operations

In modern days operations management is seen in completely different way, it is seen as set of activities
which carefully plans, organises, leads and controls the organisation's operation. This shows the
importance of the operations management, the effective handling of the operations can prove very
effective and profitable on the other hand failing to handle it in a proper way could spell disaster to the
company (Karlsson & Voss, 2009).

Importance of operations management:

The common belief amongst the people was to believe that the operations management was important
only in the manufacturing industry. The belief was supported with the fact that the manufacturing
industry had to take care of more number of processes and operations starting from obtaining the raw
materials till the goods are sold and also in many cases after sales assistance was also was considered
hence creating the belief that the operations management is important to manufacturing industry
(Chase & Zhang, 1998). In case of the service industry they have various amounts of process involved
starting from understanding the customer needs to getting a feedback on the service and hence at some
point the service industry tells the manufacturing industry what they want and hence to manage
operations within the service industry is as important as managing the operations within the
manufacturing industry. Whenever a company is offering a product or a service then that company has
to make sure that the customers' needs and demands are met at all time. This is a very important
process and hence the marketing team plays a vital role in understanding what customers' want and how
to fulfil it. The marketing team collects details from the customers' and uses it as the input for the design
of products and services (Gupta & Boyd, 2008).

So any operations management involves similar management tasks irrespective of what industry or
business one operates. It involves Planning, Staffing, Controlling, Directing, Motivating and Organising.
Irrespective of business, the operations management ranges across the organisation as part of strategic
and tactical operations (Voss et al., 2002).

To understand the importance of operations management IKEA is taken as an example.

IKEA is a Swedish company which sells ready to assemble furniture, appliances and home accessories.
With net income of 3.202 Euros in the year 2012, IKEA is one of the biggest businesses in the world. IKEA
gets the products and furniture designed in Sweden however the manufacturing is done mostly in the
developing countries in order to keep the costs down. IKEA has suppliers from almost 50 countries. The
biggest of the entire supplier for the IKEA is China (Johansson, & Thelander, 2009).

The case of IKEA is perfect to explain why Operations Management is important to all types of business,
at the production or manufacturing section the company aims to reduce the wastages, increase
productivity and time and resources management in order to make sure that the production cost is low
and at the stores the company aims to make sure that they warehouse is utilised properly, customers are
explained the details and finally the product is delivered without issues so that the shifting cost is low.
Also the stores have to take care of marketing and sales which involves their own process. So this
indicates that there will always be set of operations irrespective of what field a business is in and at the
end of the day successful businesses are those which manage their operations effectively and efficiently.

Objectives of Operations Management:

The operations management has two primary objectives that needs to achieve and in many ways it can
be said that both these objectives are interrelated. The objectives are customer service and resource

The customer service is the main objective any company because at the end of the day irrespective of all
the strategy, marketing and operations management if the customer is not happy with the product or
the service then the purpose of the entire enterprise is fallen. So the operations management makes
sure that all the customers' needs and demands are met and do that the company also has to make sure
that it makes use of the resources effectively. If the resources are not used carefully then there are
chances that the production cost increasing and hence the overall profit margin will reduce and the
enterprise objective has failed. So both the objectives must be met in a complementary way so that the
company benefits out of it.

The objectives of the IKEA are to make sure that the quality is managed at all times and yet making sure
that the operations are done effectively to save the resources so that the company can benefit out of it.

Operations & Operations Management

Operations, as per many definitions by researchers,

includes "all those activities required to create and

deliver a product or service, from procurement

through conversion to distribution." It is one of the

3 basic functions of an organization i.e. Finance,

Operations & Marketing. Like the other necessary

functions of an organization, managing operations

function is also crucial for the success of a

company and is particularly related to the

generation of product or services.

Operations is type of activities that go on in a

organization regardless of whether end product is a

good or service. Major, overall activities often

include product creation, development, production

and distribution, managing purchases, inventory

control, quality control, storage, logistics and

evaluations of processes in a typical manufacturing

setup. Wherein in a service organization these can

be customer care, backend services, IT support

services / Data storage, stores / distribution,

security, facility maintenance etc. Thus every

organization has Operations function whether or not

it is named so.

Operations is also defined in terms of

transformation process wherein inputs are

converted to outputs. Galloway (1998) defines

operations as all the activities concerned with the

transformation of materials, information or customers,

depending upon the type of organization. During the

transformation operations add value to inputs to

produce goods or services.

Every individual, every economic enterprise, every

government, every educational institution and every

organization performs ‘Operations’. These

operations may have different names: processes,

transactions, work flows, production lines,

curricula, cooking, serving, writing, presenting,

accounting, or working. But they all have certain

common characteristics: they all have input, they all

transform the inputs through different means and

they all have output & use resources.

Operations Management, as per industry experts,

is “the set of activities that creates value in the form

of goods and services by transforming inputs into

outputs.” Operations management focuses on

carefully managing the processes to produce and

distribute products and services such that it adds

value to firms inputs to convert to profitable


In short Operations Management is the science and

art of management of: People, Process & Systems

for delivery of a useful product or service

successfully to customers.
Operations management is a fundamental part of

any organization. Forbes magazine reported in 2011

that about three quarters of all CEOs came from an

operations background. Not all these CEOs studied

operations in school; only some of them did. They

got on the job training and thus took time to learn

the concepts of Operations Management.

Importance of Operations Management

The field of operations management has gained

increased recognition due to public awareness o